Since education makes a person more likely to leave your region, how do you justify your investment in human capital?

Friday, January 04, 2008

Flat World Exceptions

I'm well versed in early Post Cold War optimism. History ended. The nation-state was fading from the map. Geography didn't matter. Richard Florida and others have reined in these utopian visions. Proximity is the rule and the world inhabitants are still busy urbanizing. The Flat World is nothing more than good copy.

I prefer to look beyond the Jihad vs. McWorld dichotomy and consider the exceptions to the proximity rule. Looking at patterns of international migration reveal a flat world where geography does indeed still matter. Moving long distances is one of the errors in predictive economic models. Even for the Creative Class, no place is too far.

Remittances have many virtues. Sent directly to families, money cannot be stolen or frittered away by middlemen in aid agencies or governments. Flows are less volatile than aid or investment, and can be stepped up quickly if the need arises. For example, South-East Asians abroad sent extra cash home after the tsunami in 2004. Migrants often feel morally obliged to send money back. A survey of Mexicans in America in 2007, by the Inter-American Bank, found that three-quarters of them earned less than $20,000, yet on average they sent home $3,550 a year. And not just for a short while: Kathleen Newland of the Migration Policy Institute in Washington, DC, points to a study of 9,000 African doctors in America who sent home an average of $20,000 a year, some of them after 20 years away from home.

Your place of residence isn't necessarily where you invest or even spend your money. Tribalism is alive and well. Former relationships and shared identities are more important than neighbors. Connectivity is the rule and geographic context is the exception.